Pepco rate ruling expected Friday

Utility has asked for an extra $61 million from customers, plus more upfront

Pepco customers should know Friday if they will have to pay more for electric service.

Maryland’s Public Service Commission was scheduled to rule Friday on a request by Pepco, which has more than 789,000 customers in Maryland and Washington, D.C., for new rates that would generate $60.8 million more in revenue and cost the average customer $7.13 more per month.

That new rate would increase the allowed return to Pepco’s investors from about 9.31 percent to about 10.25 percent. Currently, Pepco investors earn about 5 percent on their investment.

On top of the rate increase, Pepco is seeking permission to charge a graduated fee during the next three to four years to fund improvements to its grid.

Intending to use the money to accelerate tree trimming, upgrade 12 more feeders each year and bury six feeders underground, Pepco asked for permission to charge its average customers 96 cents more a month in 2014, $1.70 more a month in 2015 and $1.93 more in 2016 to pay for a portion of the estimated $192 million it would cost to make those improvements.

The utility made this latest request for more money in November, just four months after the commission denied most of what it asked for in 2011, granting it only $18 million of the $68 million it sought.

Although Pepco was quick to file the second rate case, Myra Oppel, vice president of regional communications for parent Pepco Holdings Inc., said Thursday she would not speculate on what the company would do if most of its request is denied again.

“We need to see what tomorrow’s decision is,” she said.

Montgomery County has opposed giving Pepco all of what it wants.

The county told the commission in June that Pepco should be allowed to raise only $6.5 million in new revenue, an 89 percent reduction in the utility’s request. County attorneys argued that Pepco has not met the burden of proof required to justify the full increase.

The county also objected to the new surcharge, arguing Pepco has not proven that it’s necessary.

Pepco said in November it needed the money to continue improving its reliability.

The utility started a five-year plan to improve reliability in 2010 after a Public Service Commission investigation into the utility’s reliability and quality found it operated with unacceptably low reliability for years.

The average number of outages experienced by customers grew every year from 2004 to 2010, which the commission said in its report of the investigation, “speaks volumes about [Pepco’s] steadily deteriorating level of reliability and coincides with its poor vegetation management practices.”

In the last year, customers served by upgraded power lines saw a 39 percent reduction in average power outages, and when outages did occur, they did not last as long, resolving on average 42 percent faster, Pepco spokeswoman Courtney Nogas said in June.

Powerupmontco founder Abbe Milstein said in June that her organization, party to the rate case, has major concerns about the potential outcome.

Former commission chairman Douglas R.M. Nazarian took a strong position against upfront charges such the one requested by Pepco, Milstein said.

But the commission has a new chairman, W. Kevin Hughes, and the parties have no idea which way he will lean, Milstein said.